During the course of real estate transactions, buyers and sellers often hire escrow companies to finalize the transaction. Real estate transactions are especially sensitive because they often involve a unique and valuable asset, i.e., commercial or residential real estate. Escrow companies generally help guide these transactions and protect assets. However, at times escrow proceedings can cause legal disputes and conflicts. At the Law Offices of Salar Atrizadeh, we guide our clients in legal matters regarding all aspects of real estate transactions by using our skills and knowledge to create solutions to protect your real property rights. Our long history of experience with real estate transactions allows us to provide clients with unparalleled legal counseling. Indeed, our knowledge of the real estate market helps us serve buyers, sellers, and escrow companies as each navigates through real property purchases and sales. In the unfortunate event that any such transaction leads to a legal dispute, we can help protect your property, assets, and legal interests.
In general, parties use escrow companies to transfer title of a property and provide payment of the purchase price for the transfer. The real estate transaction tends to take place concurrently. Therefore, both the buyer and seller benefit from having a neutral third party, the escrow company, guide the transaction. Escrow agents typically serve three main functions—(1) obtain a preliminary title report; (2) obtain title insurance; and (3) carry out the escrow (i.e., transfer the buyer’s funds to the seller in exchange for title). The extent of the escrow agent’s involvement in a real estate transaction will depend on buyer’s and seller’s preferences and jurisdictional standards.
To help guide the escrow agent through a real estate transaction, buyers and sellers will often submit escrow instructions outlining their preferences and requirements for the escrow proceedings and any applicable regulations for the transaction. These instructions may include escrow fee amounts, deadlines, and any limitations. All parties must agree in writing to modify escrow instructions. Additionally, escrow agents are contractually bound to follow the instructions throughout the transaction. Buyers and sellers will also submit a deposit with the escrow company to initiate the proceedings. Buyers and sellers negotiate the amount of the deposit and each party’s percentage of contribution to the deposit. These terms will also be contained in the escrow instructions. In certain circumstances, the parties have the right to cancel escrow. Indeed, in some situations, parties may have a right to seek remedies for failed escrow proceedings. For example, if one party performs all responsibilities, and the other fails to satisfy requirements within the designated time period, the performing party may cancel the escrow and seek a return of the escrow deposit. The particulars of the right to cancel escrow and the right to collect a portion of the deposit will depend on the specific circumstances of each transaction.
In light of the duties and liabilities of buyers, sellers, and escrow agents, it is increasingly important to seek the assistance of an attorney who can explain legal requirements and implications and help protect your interests throughout a real property transaction.